March 22, 2007	Thursday	Rabi-ul-Awwal 2, 1428

KARACHI, March 21: Dewan Sugar Mills Limited does not subscribe to the view that excessive sugar makes a mill fat. The company has recently decided to buy out/merge/amalgamate with two other listed sugar companies: Bawany Sugar Mills Limited and Al-Asif Sugar Mills Limited.None of those mills really have much to offer to investors, which is why one investor termed the event as the “union of the disadvantaged”.

The board of directors of companies of the same group — Bawany Sugar Mills and Al-Asif Sugar Mills — in their separate meetings held on March 14 approved ‘the Scheme of Arrangement for Amalgamation’ proposed pursuant to the provisions of sections 284 to 288 of the Companies Ordinance, 1984, to merge/amalgamate themselves “with and into Dewan Sugar Mills Limited” by transfer to and vesting in Dewan Sugar Mills Limited the whole of undertakings and businesses of Bawany and Asif together with all the properties, assets, rights, liabilities, quotas and obligations of every kind and description as subsisting on the appointed date, by allotment of fully paid up ordinary shares of Dewan Sugar Mills Limited to the registered holders of the shares of Bawany Sugar in the swap ratio of (one-for-two) 1:2 and in case of Al-Asif Sugar Mills in the ratio of (one-for three) 1:3.

A merger petition is to be filed in the High Court of Sindh.

The devouring of two other mills would naturally make Dewan Sugar a little bulky. It has to be seen if that goes to improve the operational and financial performance of the company. But it is just that among the three, it is Dewan that still stays quoted on the ready board of the Karachi Stock Exchange (KSE); the other two — Al-Asif and Bawany — having been relegated to the ‘defaulters’ counter’. The price of the 10-rupee share in Dewan Sugar is currently trading at around its par value.

For having failed to declare dividend/bonus for 5 years, from the last declaration, Bawany and Al-Asif sit on the ‘defaulters’ counter under section 32(1)(b) of the KSE’s listing regulations.

Sugar mills, almost all across the board yielded bitter results during the last reporting season for the year ended December 31, 2006. That looked imminent following an unending battle between cane growers and millers and a hapless broker-the Government.

The KSE Annual Report for the year 2006 shows 37 listed companies in the sector with paid-up capital of Rs6.7 billion. Most sugar mill shares are inactive and illiquid, which is why investor interest in sugar scrips is limited to just a few profit making and dividend paying mills that stand aside the loss making units.

Due to their limited floating stock, analysts at stock brokerage houses only rarely follow a sugar mill. But investors though are not much enthusiastic about the performance of shares in sugar companies, they can scarcely distance themselves from the use of commodity and its pricing.